VirnetX wins Another $500,000,000 from Apple, but Will They Ever Get Paid?

VirnetX won another big Jury verdict against Apple — $500 million after the Jury found that Apple’s FaceTime, iMessage and VPN on Demand violated several VirnetX patents.  U.S. Patent Nos. 6,502,135, 7,490,151, 7,418,504, and 7,921,211.  The district court previously ruled on summary judgment that the patents were not invalid.

In a 2012 decision, prior versions of the services were found to be infringing several of the same patents — adding another $300 million to the tab.   In addition, in this case a separate jury previously awarded another $500 million for separate acts of infringement.

In parallel fashion, PTAB has ruled the asserted claims of all of the patents invalid. All these conflicting rulings are now coming together for a big party (or perhaps train wreck) at the Federal Circuit.  I hope the court can reach a well reasoned decision.

 

32 thoughts on “VirnetX wins Another $500,000,000 from Apple, but Will They Ever Get Paid?

  1. 11

    The well reasoned CAFC opinion would be to abandon this silly fiction that PTAB is not rendering Art III opinions merely advisory. Hayburns’ case writ large. A final judgment is the final judgment of a district court, not a final judgment only after every possible appeal that might happen has happened. That’s when issue and claim preclusion attaches, and the CAFC, has invented yet another anomaly where a ‘final judgment’ isn’t really a final judgment to yet again accommodate the aberration called PTAB. I think the new Commissioner should sit himself on a PTAB, and create a doctrine of comity with the Art III branch – and starting giving repose to validity issues that have been tried to a finality in D.Ct. This is just untenable, having a patent upheld multiple times and multiple suite in D.Ct. after full blow adversary litigation only to have PTAB sometimes years after the fact, invalid the patent claim.

    1. 11.1

      You need to focus on the precise point in the process in which a taking occurs, iwasthere.

      It is at THAT point (and prior to any actual determination that a mistake indeed has been made or not) that the sticks in the bundle of property rights has changed to ALLOW the non-Article III forum to apply its different standards.

      Crying that the standards are different in a non-Article III forum from an Article III forum and “wanting” comity is asking the wrong question.

      One must ask the right question.

      1. 11.1.1

        Hey Anon, i agree with you. But we have the new PTO director asking what he can do to reign in the disruption of the PTAB, sans Oil States, tossing it out. If he wants to help stabilize the patent system, he could add a rule that allows the patent owner to import judgments, and prior proceedings, appeals, injunctions, etc. and demand comity and repose from the PTAB. The director could pick a model case, and issue a PTAB opinion as precedence to establish a rule of procedural law for PTAB to follow. Just like Manbeck (?) did with the board and ex parte reexamination – to “act in harmony” with the Art III department. There is no question, that the way PTAB is exercising power now it is rendering the Art III division a “mere advisory” body.

        1. 11.1.1.1

          Thanks for the reply, iwasthere.

          I see what you want, but I do have to wonder whether an administrative agency has the power to DO what you want.

          Much like the (clearly erroneous) decision as to American Indian Tribal Immunity, the administrative agency of the Executive branch simply does not have the authority that it appears to think that it does, and (taking your last comment), “rendering the Art III division a ‘mere advisory’ body” is at once too broad and too narrow a statement. First, there IS a real difference between the two forums and the rules that apply in the two forums.

          I stress this because if this is glossed over, the very point that I asked you to consider at 11.1 is lost in the dust. The plain fact of the matter is that the two forums are NOT the same. In that regard, there is NO (proper) way of enforcing “comity” because the two forums simply are not the same.

          As to “mere advisory,” this too is a bit more intricate. There are items decided by the courts that simply are different based on the different forums (for example, inequitable conduct). There are (however) things that are NOT different (the executive branch has NO power to decide (or change) the meaning of the law. The executive branch’s SOLE task is to apply and enforce the law. This is one reason why any sense of PTAB “common law” or precedential opinions may run afoul of the separation of powers doctrine.

          Fold into this situation, the already constrained aspect of our particular neck of the woods: statutory law. As I have posted recently elsewhere, there is a fundamental difference in how common law may or may not be applied when it comes to strict statutory law. And patent law is as strict of a statutory law as is possible (seeing as the Constitution explicitly spells out the single branch that is permitted to write patent law.

          Now mind you, I am aware that our system does permit one branch to let another branch “borrow” law writing ability on occasion. Such though is not taken loosely, and strict rules apply. For example, Congress permits the Courts to apply rules of equity in certain situations (as explicitly pointed out in the statutory law). In other areas, (such as 35 USC 101) there is NO such allocation of shared power. Quite in fact, one aspect of the Act of 1952 was the explicit withdrawal of a previous grant of power to the judicial branch (to set the meaning of the word invention through common law evolution) with Congress explicitly choosing a different path of carving out of what was once a single paragraph the different law sections of 101/102/103.

          However, to return to your “act in harmony” view, I would have to see the details of how you would want the administrative agency to put such into effect. The administrative agency – being of the executive branch – is limited (and that is by design).

          A design that is so often forgotten in discussions on this blog (sometimes “forgotten” on purpose because such is a rather inconvenient restraint to some who desire Ends regardless of the Means).

          1. 11.1.1.1.1

            I don’t have access to USPQ anymore. If you do, find In re Perne, Manbeck (i believe) seated the Board panel and issued a decision creating – administrative estoppel – to require the Board to accept prior decision of fact and law by the Art III department. Current Director could do the same. Actually he could do more, since he is empowered to promulgate the regulations implement the PTAB statute. There is plenty he can do with the rules to give patent owners more procedural due process.

    2. 11.2

      These are really good points.

  2. 10

    Doesn’t anybody around here do any homework??? These patents were tried for invalidity to a jury three separate times in an Article III court by Microsoft, Apple, and Cisco and all three attempts failed. Apple took their complaint to the CAFC and failed there too.

    Everybody claiming to have experience in the time of invention should well know that VPNs were notoriously difficult to set up at worst and only a minor headache on good days. These patents delineated a way to set the VPNs up without any other input from the user outside the VPN other than the target’s name itself. It’s only secure if people use the security and this method took out the headache for the salesman trying to get into the company’s database to price out his orders for the day.

    Of course once you invoke BRI, Dennis The Menace’s string and tin cans constitutes prior art and the PTAB panels haven’t met a prior art they don’t find invalidating. The examiner on several of these patents, Krisna Lim has been around since 1988 and still has a job, so something just doesn’t make sense.

    1. 10.1

      Many people will put a cart before a horse when given a chance. The abstract idea here is to automatically put the horse in the correct spot when someone tries to use a cart. Does it really add something more to apply this to vpn and secure website?

      1. 10.1.1

        Slashdot Reader busy burning down their jobs.

    2. 10.2

      Those are fair points.

  3. 9

    So what happens when the Federal Circuit issues Rule 36 judgements and just affirms everything? Not holding my breath for anything well-reasoned from the Federal Circuit.

  4. 8

    “In parallel fashion, PTAB has ruled the asserted claims of all of the patents invalid. All these conflicting rulings are now coming together for a big party (or perhaps train wreck) at the Federal Circuit”

    Maybe not. Oilstates is out there and it’s been quite a wait for that opinion. The longer we wait, the more I think we’re not only getting 5-4 or 6-3 split in Oilstates, but that IPRs will be declared unconstitutional.

    1. 8.1

      The longer we wait,…

      Agreed.

      If this were a simple “no-nonsense” affirmation, it would have been released already.

  5. 7

    I heard a rumor that these guys was trolls n trollin.

  6. 6

    Night Writer and Martin H Snyder:
    I guess that’s why Apple wanted to have the same patent but was turned down because VirnetX already had it. It wasn’t that obvious except in hindsight. Of course from your armchairs pretty much everything must be obvious.

    Can you imagine Apple’s response if Apple had the patents in question and someone (Google?Amazon?Facebook?Esp. Samsung?) infringed. OMFG! The horror…..

    1. 6.1

      Just my humble opinion. I knew about networks and VPNs back at the time of the priority date. Seems obvious to me.

    2. 6.2

      Apple wanted it because it’s a weapon of mass economic destruction regardless of the merits. As to those merits: when even Night Writer thinks it’s a dud patent, you just know it should never have issued.

      1. 6.2.1

        Whether or not it should ever have issued is a minor point, Marty.

        The major point is what to do about it – and what NOT to do about it.

  7. 5

    People don’t really get that these type of cases (where the CAFC will probably just toss out everything and invalidate everything) pretty much take the wind out of inventors and companies competing with the near monopoly corporations.

    Pretty much the way people feel is that any patent can be taken out by repeated IPRs. That is the conventional wisdom now.

    So where does that leave us?

  8. 4

    “violated several VirnetX patents”

    violated? As in, caused the patents to lose their virginity against their will?

    I think the correct term to use here is “infringed”.

    1. 4.1

      This made me laugh. :)

      1. 4.1.1

        Me too.

    2. 4.2

      Metaphorically, the patent system has been being r a p e d for some time now.

      So I can see the use of the term “violated.”

      Especially in the Apple (albeit not VirnetX) situations (Apple may not be a Google, but they appear to be in the same league):

      link to ipwatchdog.com

  9. 3

    imessage was not included in the trial

  10. 2

    Dennis: You are a fair-minded pro- “I hope the court can reach a well reasoned decision.” That PTAB found all the asserted claims invalid is not surprising; but, in view of the district court decision, all of this expensive, litigation-machination feels pretty disgusting. Think I’ll buy a case of popcorn and wait for the Federal Circuit-Circus show to begin. Trying to explain this rodeo to growing Small-Entity clients is embarrassing.

    1. 2.1

      Well said Don.

  11. 1

    1. A method of transparently creating a virtual private network (VPN) between a client computer and a target computer, comprising the steps of:
    (1) generating from the client computer a Domain Name Service (DNS) request that requests an IP address corresponding to a domain name associated with the target computer;
    (2) determining whether the DNS request transmitted in step (1) is requesting access to a secure web site; and
    (3) in response to determining that the DNS request in step (2) is requesting access to a secure target web site, automatically initiating the VPN between the client computer and the target computer.

    1. 1.1

      1. A method of transparently creating a virtual private network (VPN) between a client computer and a target computer, comprising the steps of:
      (1) generating from the client computer a Domain Name Service (DNS) request that requests an IP address corresponding to a domain name associated with the target computer;

      Wow, that’s clever. Nobody would think to identify a computer by its IP or translate DNS to IP. Wait, what? Isn’t that the entire purpose of the DNS scheme?

      (2) determining whether the DNS request transmitted in step (1) is requesting access to a secure web site; and

      Oh I see. The capability to identify a secure or non-secure site is built into the HTTPS protocol, but actually using that capability is somehow inventive.

      3) in response to determining that the DNS request in step (2) is requesting access to a secure target web site, automatically initiating the VPN between the client computer and the target computer.

      Another stroke of genius. Who could have stumbled across the notion that there is such a thing as a VPN? And that sometimes you would want to yikes automate the log-in to such a thing?

      But I get it- just taking three utterly banal elements isn’t an ordered combination, so give someone a billion dollars who thought to order it, but didn’t think to create a vast market for all kinds of trivially easy, but hard to market at scale tech features.

      Innovation is served, and we all get rich.

      1. 1.1.1

        It is hard to see how this is non-obvious even when accounting for hindsight reasoning.

        1. 1.1.1.1

          I cannot conceive of any argument for patentability.

      2. 1.1.2

        Yeah, seems obvious to me too.

        But, what was the process before? And if this wasn’t it, why not?

      3. 1.1.3

        This is a broad claim but I don’t think it’s prima facie obvious. Show me prior art that automatically/selectively establishes vpns in similar contexts and then we can judge it.

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